Ontario Takes a Phased Approach to Cannabis Retail Licensing Due to National Supply Shortages

Today, the Honourable Caroline Mulroney, Attorney General and the Honourable Vic Fedeli, Minister of Finance, released the following statement on changes being made to the licensing process for recreational retail cannabis stores in Ontario:

“It is the federal government’s responsibility to oversee cannabis production and to provide a viable alternative to the illegal market by ensuring there is sufficient supply to meet consumer demand. Yet, we continue to see severe supply shortages across the country in legal, licensed recreational cannabis stores.

For example, Alberta stopped issuing any new retail cannabis licences after only receiving 20 per cent of the stock it ordered from federally licensed producers, and in Quebec retail operating hours have been reduced to four days a week. In addition, the shortage of supply has restricted online sales in many jurisdictions.

This is a national issue that demands an immediate response from Justin Trudeau and the federal government. The Government of Ontario has brought this to the federal government’s attention repeatedly. At a recent meeting of federal, provincial and territorial Finance Ministers in Ottawa, Minister Fedeli, along with Finance Ministers from several other provinces and territories, raised the issue of a severe shortage of supply across the country with Federal Finance Minister Bill Morneau.

Taking into consideration the required investments for a prospective Ontario private legal retailer, we cannot in good conscience issue an unlimited number of licences to businesses in the face of such shortages and the federal government’s failure to provide certainty around future supply.

That is why today we are announcing that Ontario will be taking steps to ensure that private cannabis retail stores open in phases. In the initial phase up to 25 licences will be issued so operators can open for business on April 1, 2019 and stay open.

To ensure a fair and transparent process, the Alcohol and Gaming Commission of Ontario (AGCO) will implement a lottery system to determine who is eligible for the initial licences to legally operate a store in Ontario. All interested parties will be able to submit an expression of interest form online to the AGCO from January 7 to January 9, 2019. The expressions of interest will be put into a lottery pool for a draw. The draw will be conducted on January 11, 2019, with the results to be posted on the AGCO’s website within 24 hours.

The lottery process will be overseen by a third-party fairness monitor to ensure equality and transparency in the treatment of the expressions of interest, as well as an appropriate distribution of stores in each region of the province, which is set out in the regulation. Further details on the lottery system will be available on the AGCO website.

The OCS continues to work closely with federally licensed producers to monitor the availability of supply and to secure supply for Ontario, including through regular product calls and frequent visits to producer facilities. The lottery is going to be a temporary model for issuing private retail licences. When Ontario has determined that the federal government has provided for enough reliable supply, Ontario will communicate next steps for additional private retail stores.

Our government refuses to compromise the viability of Ontario businesses. Private retailers need certainty from the federal government that there will be a reliable supply of cannabis to support their business and combat the illegal market.

We will continue to urge the federal government to take immediate action to ensure licensed producers ramp up production in order to meet the anticipated market demand for recreational cannabis.”